Expert Advice

Social Good — Carte Blanche for Bad Nonprofit Behavior?

| Updated June 18, 2018

Is social good a valid excuse for sloppy management practices?

Kathryn Engelhardt-Cronk, MissionBox co-founder and CEO is joined by Joseph Flesh, CEO of healthcare technology company Purple Binder for the MissionBox DoubleTake — a column that offers opinions about the peskier aspects of working in the nonprofit sector. The opinions offered here are based on the authors' personal nonprofit experience and may not reflect the opinions of MissionBox, Inc. These opinions should not be considered legal advice or used as a substitute for professional legal consultation. MissionBox readers are invited to submit alternative responses, which may be published here as well.

Why do nonprofits think they can get away with anything because they are “doing good?”

I regularly shop at a local charity store whose profits from each sale are divided between the donor and the charity. I wanted to help the charity out, so I decided to resell several very nice antique chairs through the shop.

Recently, I went to the shop to see if my chairs had sold. I was astonished to find that they were gone, without the shop’s knowledge, in what was apparently a theft that was only discovered when I asked about the chairs.

When I very calmly and politely asked about how I would be compensated for the loss of my valuable furniture, I was told that they were not responsible for thefts and I had no recourse. When I started to protest, they claimed I signed an agreement with this stipulation, but I never was asked to sign anything. When I asked to see the agreement I signed, I was told they couldn’t find it. They also accused me of being unreasonable in demanding to be compensated for their neglect because they were doing “good work.”

To add insult upon injury, they had their lawyer send me a letter saying I was never welcome in the store again, either as a shopper or a seller.

No worries on that score — I will never set foot in their little shop of horrors again!

News flash: just because you work for a nonprofit, it doesn’t mean you have the right to fail to act in a business-like, reasonably responsible and honest manner. Is my experience common when dealing with a charity shop?

Joseph says ...

I understand how this experience could definitely turn you off selling and buying through charity shops. Most charity shops, fortunately, are much better run than this! Personally, I do a fair amount of shopping at Chicago’s chain of Brown Elephant charity shops, whose proceeds benefit the Howard Brown Health Center.

With the explosion of for-profit vintage, consignment and other second-hand shops, many charity shops are aware that the playing field is more crowded and they’ve upped their game accordingly.

It’s unfortunate that your chairs disappeared, but it’s also a great example of how nonprofits are not always driven by the same motives, incentives or checks that drive for-profit businesses. In a for-profit shop, even employees who slack off know that if the business ceases to make money, they will eventually lose their jobs. But at a charity shop, the same may not be true.

For example, it’s possible that the fixed expenses of the charity shop such as rent and employee salaries, are allocated and paid entirely through the charity’s annual budget. If that’s the case, as long as fundraising is going well, rent and salaries may be paid even if the shop continuously loses money.

Fortunately, nonprofits are becoming savvier about avoiding problems like this. The movement to measure impact, rather than throughput, means that non-profits are paying more attention to how they operate and what results they produce.

It’s no longer enough to say to a funder, “We operate a charity shop!” These days, the funder will want to know exactly what impact the shop has. And if the charity can’t demonstrate real results from the shop — whether through funds raised or another benefit such as job training — I’d wager that someone else will soon occupy that storefront.

Kathryn says ...

This is reprehensible and I’m sorry you found out the hard way that this particular charity shop doesn’t have its act together. They don’t make their policies clear and they don’t keep track of their paperwork or their merchandise.

Let me tell you that most charity shops are quite business-like. This store is an aberration, but it is true that some nonprofits fall back on the “we’re doing 'good' work” as an excuse for sloppy record keeping, untrustworthy behavior, poor service delivery and other problems.

Here’s the truth: no matter what your belief system, but in a sense ALL nonprofits and charities are doing god and goddess work – all 10,000,000, worldwide. Their “goodness” doesn’t make nonprofits less culpable in cases like this or excuse poor performance.

It IS true that nonprofits can be overworked and under-staffed, leading to unnecessary errors. That said, a transaction between what amounts to a donor (you were willing to give a portion of the proceeds to their cause) and a nonprofit entitles you to respect, civility and care of your belongings.

If you use social media, I might consider warning others about this charity’s behavior. If you don’t, a simple and effective way to spread the word is to tell this story on your neighborhood’s forum, such as NextDoor. Maybe this charity will get the picture when they start to lose their sellers (read: donors).

Now, your take!

Robert P. says ... While I agree that the specifics of this particular case might not be the norm, the fact is that many nonprofits and their apologists believe that because they are “on the side of the angels,” normal rules do not apply to them. It too often leads to a range of behaviors that does neither the sector, nor those who support it, any good. For example, the scandal that enveloped Wounded Warriors a few years ago demonstrated an attitude of being above or beyond the rules that would typically guide most for-profit entities. It begs the question of whether the practices that hurt the organization’s reputation would have taken place if there were stockholders to answer to.

There are numerous resources we all can and should use — Charity Navigator, BBB Wise Giving Alliance and Charity Watch among them — to ascertain whether the charity we’re thinking of supporting in any way is meeting basic professional and fiduciary standards

Finally, ask questions. Too many donors believe they're disallowed from asking a nonprofit questions about how it operates. This is a ridiculous notion that has allowed slipshod charitable operations to continue to waste valuable resources in the name of “doing the good work.”

MissionBox editorial content is offered as guidance only, and is not meant, nor should it be construed as, a replacement for certified, professional expertise.

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